For the longest time, when I saw the company name Ocugen (NASDAQ:OCGN), I resorted to a familiar and banal argument: OCGN stock is best reserved for speculators.
Despite that I’m obviously wrong today, I think this is a forgivable miscue. Prior to the novel coronavirus causing the biotech pivot, shares were trading hands at around 30 cents.
You got to look at it from an analyst’s perspective. Very few are going to recommend an equity unit that’s priced less than a soda can in a vending machine. Further, OCGN stock has a long history of disappointing shareholders. Once shares fall under a buck, they usually don’t come storming back.
Even the Covid-19 pivot seemed like a stretch. As you probably know, Ocugen specializes in gene therapies to address rare eye diseases that lead to blindness. The pivot to vaccine development came out of nowhere.
True, Ocugen delivers its OCU400 gene therapy product via an adeno-associated viral (“AAV”) vector. Johnson & Johnson (NYSE:JNJ) utilizes a similar approach for its Covid-19 vaccine. But here’s the thing — Ocugen’s Covaxin, which it developed in partnership with Bharat Biotech, is an inactivated vaccine.
As the name suggests, inactivated vaccines use an inactivated virus to spark an immune response. It’s a proven platform but it’s also a different approach to Ocugen’s specialty in AAV vectors. Therefore, the synergy is not readily apparent.
Still, OCGN stock received a huge boost recently — albeit a cynical one — due to the worsening crisis in India. A second wave of Covid-19 has resulted in an alarming rise in fatality rates. Medical experts appear to have been caught off guard, putting the country in a very desperate situation.
Hopefully, Covaxin can turn the tide against the virus. But the narrative for OCGN stock centered on U.S. approval. This is where things get murky.
Vaccine Hesitancy Presents Challenges for OCGN Stock
While I’ve been very skeptical about OCGN stock, recently, I did give shares their due. In late March, I proposed the idea that Ocugen could be a speculative bet on worsening conditions in the U.S.
In addition, vaccine hesitancy remains a roadblock for government agencies across the world.
As I noted, “The Washington Post interviewed a diverse set of supporters of former President Trump and discovered that while no one thought the pandemic was fake, many participants used words like “experimental,” “rushed” and “unproven” to describe the vaccine rollout.”
In theory, anybody who doesn’t want to take the vaccine for the above reasons may find comfort in Covaxin. Simply, inactivated vaccines have an extensive track record compared to mRNA-based solutions forwarded by Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA), which essentially had no track record prior to Covid.
But so far, my prior arguments appear to have flaws. First, coronavirus cases are on the decline in this country. That could change but so far, the trend points in the right direction, which then disincentivizes vaccines among the hesitant. Second, hesitancy is still a big problem.
As the New York Times stated on April 21, half of American adults “have received at least one shot of the coronavirus vaccine. Now comes the hard part: persuading the other half to get it.” The Times describes the dynamic as “hand-to-hand combat.”
Hyperbole? Maybe not. As you can imagine, deep distrust remains in our political discourse. Further, the proliferation of fake news, along with possible Russian and Chinese disinformation campaigns to sow mistrust in western vaccines (per a Reuters report), truly muddies the waters.
Then you have a Washington Post op-ed, which states that a vaccine oversupply will cause diplomatic headaches for the Biden administration as it figures out which countries to distribute inventory to.
In that case, why would the U.S. approve more vaccines when we’ll apparently have too much of them?
Pfizer, Moderna Vaccines May Be Safer
Browse the dark side of the internet and it won’t be long before you come across conspiracy theories regarding Pfizer’s and Moderna’s mRNA vaccines. Usually, the accusation is that mRNA vaccines represent a secret government plot to destroy the human genome and depopulate the Earth per the Georgia Guidestones or something like that.
But according to the European Molecular Biology Organization, “Once mRNAs enter the cytoplasm, they are translated, stored for later translation, or degraded. mRNAs that are initially translated may later be temporarily translationally repressed. All mRNAs are ultimately degraded at a defined rate.”
The last sentence is particularly important because it suggests that the Pfizer/Moderna vaccine will not impact our genome. Eventually, they won’t impact anything at all. They keep us protected, giving us time for the virus to fade out on its own or until we have a long-term (non-rushed) solution.
Therefore, even on the science, OCGN stock may be on borrowed time. If you enjoyed the recent uptick in profits due to India’s second wave, you may want to take some off the table. The bigger picture is not turning out favorably for Ocugen.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.